Regional lenders Daishi Hokuetsu Financial Group and Gunma Bank plan to integrate their businesses, a move that will create one of the largest financial groups in the industry.
The banks entered a memorandum of understanding to join under a holding company structure on or around April 1, 2027, according to statements from both firms. They expect to sign a final agreement in March 2026.
Shares of the two banks rose on Thursday as reports of the tie-up emerged. Daishi Hokuetsu shares climbed 3.8% in afternoon trading, among the biggest gainers on the 68-member Topix banks index. Gunma Bank's stock price advanced 1.4%.
Local banks are attracting market attention for a possible wave of industry consolidation given the shrinking population outside of major cities. Last month, Chiba Bank bought a 20% stake in Chiba Kogyo Bank from Ariake Capital. Three other banks based in central japan are also forming an alliance to draw talent and funding into the region.
Gunma Bank is based in the prefecture of the same name, in the city of Maebashi about 120 kilometers north of Tokyo. Daishi Hokuetsu is from Niigata Prefecture, which shares a border with Gunma.
The deal "aims to enhance scale and quality of management to create a new financial group that ranks among the top regional banks,” the lenders said in a presentation. The name of the holding company and share exchange ratio will be decided later.
The two banks' combined assets total about ¥21.4 trillion ($150 billion), trailing regional bank leaders Fukuoka Financial Group and Concordia Financial Group.
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